Heirs of landed families, gold trader tax evaders, says BIR

Posted on November 10, 2011 10:37:14 PM [ BusinessWorld Online ]

THE BUREAU of Internal Revenue (BIR) has filed tax evasion cases against the heirs of two families involved in a land transfer deal and the government employees who aided them.

The BIR pressed charges at the Department of Justice yesterday against the heirs of the late Gavino Vinluan of Pangasinan and an heir of the late Oscar R. Ongsiako of Makati City for willfully evading taxes and failing to file tax returns.

The Vinluan heirs -- Pilar V. Gonzales, Purita V. Canto, Federico Vinluan, Ramon R. Vinluan, Salvador Vinluan, Conchita V. Calvo, Hernando Vinluan, Gavino C. Vinluan, Heremias Vinluan, Socorro V. Gabionza, Israel Vinluan and Estrella V. Santiago -- allegedly failed to file estate tax returns after the death of Mr. Vinluan in February 1949.

According to investigations, Gavino left behind 25 properties and landholdings but no estate taxes were paid upon his death.

The heirs also executed a Deed of Extrajudicial Partition among Heirs with Sale for two parcels of land in 2009, but no capital gains tax or documentary stamp tax returns were submitted.

Melvin C. Castro, the deputy registrar of deeds of Lingayen, Pangasinan was also included in the charge sheet. He allegedly signed the Vinluans’ deeds, even without the Certificate Authorizing Registration (CAR) which is issued by the BIR to show that the required capital gains tax and documentary stamp tax returns have been filed and the liabilities have been paid.

The Vinluans have been assessed a tax deficiency of P7.40 million in capital gains tax and P1.86 million in documentary stamp tax for a total of P9.26 million.

Moreover, the BIR also filed charges against Juan Miguel V. Ongsiako for allegedly failing to pay estate and documentary stamp taxes after a P10-million, 870-square meter property along Roxas Boulevard was sold to him by his parents in October 2005.

The sale could have been a scheme of the family to transfer the assets from Oscar to Juan Miguel without paying estate taxes, the BIR said in a statement yesterday.

Juan Miguel’s total tax liability stands at P10.06 million, broken down into P3.65 million in estate tax, P5.11 million in capital gains tax and P1.3 million in documentary stamp tax, inclusive of surcharge and interest.

Robert M. Guillermo, the registrar of deeds of Pasay City, was likewise included in the Ongsiako case for allegedly allowing the transfer of ownership of the land without a certification from the BIR.

“The above master stroke of tax evasion could not have attained a level of sophistication without the aid of the Register of Deeds who willfully turned a blind eye and issued the new title without indicating the CAR serial number to decrease the probability of fraud detection,” BIR Commissioner Kim S. Jacinto-Henares said during the case filing yesterday.

Meanwhile, the bureau also ran after gold trader Virgilio I. Ocampo who sold P1.12 billion worth of refined gold to the Bangko Sentral ng Pilipinas from 2005 to 2008, but failed to file quarterly and annual tax returns for his taxable income.

Mr. Ocampo’s tax liability is estimated to be P804.42 million for the four-year period.

The BIR has now filed 79 cases under its Run After Tax Evaders program during the Aquino administration. -- Diane Claire J. Jiao

Businessman ordered arrested over P5.5-B tax evasion case

Posted on October 31, 2011 10:58:09 PM [ BusinessWorld Online ]

A BUSINESSMAN has been ordered arrested over tax evasion charges filed by the Bureau of Internal Revenue (BIR), with the warrant to be served by the National Bureau of Investigation (NBI).

In a resolution dated Oct. 19 and released by the BIR yesterday, the first division of the Court of Tax Appeals has issued an arrest warrant against businessman Macario L. Gaw, Jr. with a P120,000 bail bond. The businessman has a total tax deficiency of P5.5 billion for the period 2007-2008.

“The court, after due deliberation, finds the existence of probable cause for the issuance of warrant of arrest against the accused in these consolidated criminal cases,” the resolution read.

In a telephone interview, BIR Commissioner Kim S. Jacinto-Henares said that the arrest warrant will be sent by the court sheriff to the Department of Justice (DoJ), which will order the NBI to serve the order.

Justice Secretary Leila M. de Lima has assured that the warrant will be served, added the BIR chief.

“Yes, she has assured us of the implementation of the warrant. In fact, she was the one who ordered it,” Ms. Henares said, referring to Ms. de Lima.

For her part, Ms. de Lima, in a text message, said she has instructed Prosecutor General Claro A. Arellano to obtain a copy of the arrest warrant and hand it over to the NBI for implementation.

In August last year, the BIR filed tax evasion charges against Mr. Gaw for failing to pay the correct income taxes for 2007 and 2008. He also did not indicate correct information in income tax returns and failed to file value-added tax (VAT) returns for 2008.

The BIR said Mr. Gaw, president of Mega Packaging Corp. and Macro Liquefied Petroleum Gas Co., has tax deficiency broken down as P1.3-billion basic income tax, P1 billion as basic VAT and the rest in interest and surcharges.

The case stemmed from Mr. Gaw’s purchase of 10 parcels of land in 2007 and 2008 worth P4.12 billion that were later on sold for P8.42 billion. The lots were declared as capital assets with Mr. Gaw paying only 6% of the capital gains tax worth P9.11 million for 2007 and P418.75 million in 2008. If the lots were declared ordinary assets, these could have been subjected to 32% income tax and 12% VAT.

The BIR claimed that Mr. Gaw used multiple Tax Identification Numbers, making it harder to track the violations.

The DoJ has found probable cause and ordered the filing of charges against Mr. Gaw at the Court of Tax Appeals (CTA) in March.

Last week, the CTA’s second division ordered the arrest of spouses Jacinto C. Ligot and Erlinda Yambao Ligot over tax evasion charges also filed by the BIR.

The retired general was former military comptroller and was named in a plunder case at the Office of the Ombudsman. A plea bargain between him and the Ombudsman has been approved by the Sandiganbayan but its implementation was withheld. -- Nathaniel R. Melican

BIR to investigate banks on estate tax

    Published : Monday, October 17, 2011 00:00 [ manilatimes.net ]

THE Bureau of Internal Revenue vowed to put an end to the “collusion” between banks and heirs of the deceased in eroding estate tax collection.

Deputy Commissioner Estela Sales, who heads the legal and inspection group, told reporters that the agency has intensified its review on the mode of transfer of properties to individuals, particularly whether such transfer is acquired through donation inter vivos or as an inheritance.

”We want to determine whether there are badges of fraud as to the transfer of properties which is being done to avoid payment of higher taxes, which is the estate tax,” Sales said.

“There are suspicions and if we are able to prove such fraud then the transfer can be nullified pending the payment of the proper tax due plus criminal liability on the part of the taxpayer and the bank itself,” she said.

Finance Secretary Cesar Purisima earlier said the estate tax is one of the most problematic areas as far as tax administration is concerned given the substantial number of people who die every year. In 2010, the government raised merely P1.34 billion in estate taxes out of the P822.6 billion in total taxes collected. In 2009, the BIR realized P915 million from the estate tax. Claro Ortiz, BIR head revenue executive assistant and overall coordinator for Run After Tax Evaders, said banks will be equally held criminally liable as that of the erring heir should the collusion be proven. ”Its a common secret that a number of banks actually allow the heirs of their [deceased] depositors to withdraw or transfer money despite knowledge that a depositor has indeed already expired,” he said.

”The BIR aims to put an end on that practice by going after not only the heirs but as well as the banks who consented the same,” he added.

Government to press collection of estate taxes

By Iris C. Gonzales (The Philippine Star) Updated August 02, 2011 12:00 AM

MANILA, Philippines - The Aquino administration hopes to increase estate tax collections by stepping up efforts to monitor payments made by heirs of deceased persons, Finance Secretary Cesar Purisima said yesterday.

In a budget hearing at the House, Purisima said there would be a strong focus on estate taxes as yearly collections from this type of tax are very low.

“For the past seven years, collections have been below P1 billion,” the Finance chief said.

Purisima believes that yearly collections can go up to more than a billion. He said that in some cases, the amount could go as high as P3 to P5 billion for only one person.

“So I believe, we should be collecting more than a billion from estate taxes,” Purisima said.

In connection with this plan, the Bureau of Internal Revenue (BIR) would be investigating banks to find out if their officers are guilty of conniving with the heirs of deceased persons in order for them to skirt around their estate tax obligations.

At present, heirs of deceased persons need to pay a tax equivalent to 20 percent of the estate of the deceased.

Some individuals try to escape this provision by withdrawing the accounts of the deceased persons without declaring to the banks the incident of death.

The campaign is similar to the program launched during the time of former BIR Commissioner Joel Tan-Torres.

Through the project, the agency will monitor the payment of estate taxes which the BIR for so many years has not given much attention to.

According to data from the National Statistics Office, there were 403,191 deaths in 2004, 415,271 in 2005 and 389,081 in 2006.

Based on BIR records, however, only 29,198 estate tax returns were filed in 2007, 29,863 in 2008 and 26,811 in 2009.

These figures revealed that there is a very low number of estate tax returns filed. Collections amounted to P649.9 million in 2007, P854.9 million in 2008 and P876.8 million in 2009.

The BIR said it will coordinate with civil registers, hospitals, memorial parks, cemeteries, funeral parlors, crematoriums, judicial clerks of courts, obituaries, life insurance companies and other financial institutions, to access and secure records of the decedents.

The BIR is tasked to collect P920 billion this year, higher than last year’s actual collections of P822.39 billion.

Aquino admin secures dismissal of BIR official

By Iris C. Gonzales (The Philippine Star) Updated July 28, 2011 12:00 AM

MANILA, Philippines - The Aquino administration has secured the dismissal of a ranking official of the Bureau of Internal Revenue (BIR) as well as the suspension of a local government treasurer being investigated for corruption.

The Revenue Integrity Protection Service (RIPS), the anti-corruption unit of the Department of Finance (DOF) has secured the dismissal of the BIR official for accumulating wealth disproportionate with his income as a public official.

RIPS won with finality its case against BIR Assistant Commissioner Edwin Abella, who was found guilty of dishonesty in 2005 for acquiring questionable wealth beyond his and his wife’s capacity.

The decision of the Ombudsman came out on Jan. 14, 2005.

In its decision, the Ombudsman said there was “substantial evidence” that Abella committed dishonesty for “acquiring vast amounts of money and properties manifestly out of proportion to his salary and other lawful means of income.

Based on the evidence filed by RIPS, the Ombudsman said it was impossible for the respondent’s net worth to increase from P3.8 million in 1999 to P8.4 million in 2002 with his earnings.

The Ombudsman found Abella guilty of not declaring in his Statement of Assets, Liabilities and Net Worth six properties he owned including real estate assets. One property was valued at P10 million.

The respondent appealed the Ombudsman’s decision, in a pleading dated Feb. 7, 2005.

Abella said the decision was “based on grave errors of facts and law and unfounded conjectures and surmises.”

However, the Ombudsman denied Abella’s motion for reconsideration in an order dated June 11, 2011.

“The respondent failed to present new evidence that would warrant a reversal of the questioned decision,” the order stated.

Meanwhile, the Ombudsman also suspended for six months without pay a ranking local government official.

Manila City Treasurer Liberty Toledo, which RIPS sued for grave misconduct and dishonesty.

The Ombudsman said: “Notwithstanding any motion, appeal, or petition that may be filed by the respondent… the implementation of this order shall not be interrupted within the prescribed period.”

With the order, the City government of Manila is expected to implement the suspension order five days from the receipt of the Ombudsman’s decision.

According to the case filed by RIPS, from 1999 to 2004, Toledo failed to declare millions worth of properties in her SALN.

The assets were found “grossly disproportionate” to her and her husband’s annual income, DOF-RIPS said.

“The evidence on hand sufficiently warrants the preventive suspension of respondent Liberty Toledo pending the conduct of administrative investigation of the instant case,” the Ombudsman said in the order.

As such, the Ombudsman said the with the nature of her duties and functions and “the influence that her position brings her continued stay in office may prejudice the investigation of the case.”

RIPS was established to investigate allegations of corrupt practices of officials and employees of the Department of Finance and revenue agencies.

To date, RIPS has already filed a total of 86 cases against 126 public officials, 51 of whom were suspended while 19 were already dismissed from service.

Tax bureau orders all building owners to check on tenants

Posted on July 27, 2011 09:45:25 PM [ BusinessWorld Online ]

OWNERS of commercial establishments will now be required to ensure that their tenants are registered taxpayers, according to the latest issuance of the Bureau of Internal Revenue (BIR).

The BIR has begun its drive to track the untaxed sector with Revenue Regulations No. 12-2011, issued on July 25.

The latest tax regulation sets the reportorial requirements for establishments leasing commercial spaces.

“It shall be the primary responsibility of all owners or sub-lessors of commercial establishments/buildings/spaces to ensure that the person intending to lease their commercial space is a BIR-registered taxpayer,” the issuance stated.

Their tenants must have a tax identification number (TIN), a BIR Certificate of Registration and duly registered receipts, it added.

These requirements ensure that those engaged in retail remit value-added taxes and income taxes to the government.

“It is the duty of building owners to ensure that those they deal with are registered taxpayers,” BIR Commissioner Kim S. Jacinto-Henares said in a telephone interview yesterday.

“If not, they are aiding and abetting tax evasion,” she warned.

“I am only leveling the playing field. These commercial establishments pay taxes to the government, so their tenants must also do the same,” she explained.

Under the new issuance, building owners will now be required to submit, under oath, a tax registration profile of their lessees to the BIR twice a year.

They must provide the layout and unit addresses of their entire commercial space to the bureau, as well as the certified true copy of their lease contract per tenant.

Lessee Information Statements must also be passed to the BIR, indicating the registered names of the tenant, the TINs, the Authority to Print number for their official receipts and invoices, and the permit number for their cash register or other points of sale machines.

These will be submitted every Jan. 31 for all tenants as of Dec. 31 of the previous year, and every July 31 for the tenants as of June 30 of the current year.


However, for this year, the BIR has set a transition period, giving all building owners until Sept. 1 to submit their requirements for their tenants as of July 31.

Those who do not submit these requirements will be penalized by the BIR for willfully failing to pay taxes and supply correct information, subject to a fine of no less than P10,000 and imprisonment of up to 10 years.

Owners of commercial establishments who also falsify information will be charged with perjury, the issuance warned further.

A tax alert from Punongbayan & Araullo reminded lessors to start getting the required information from their tenants.

“Report accurate information because these may be used against you during tax examination,” the tax alert read.

“To ensure correctness of the information provided, you are advised to request for the source documents.”

Building owners must also ensure that the documentary stamp tax due on their lease contracts have already been paid, and that proof of payment will be made available at the BIR’s request.

Lastly, Punongbayan & Araullo urged lessors to require their unregistered lessees to begin the process already, to make it in time for the Sept. 1 due date of the report.

The BIR has identified the informal sector as one of the areas it will focus on to expand the tax base and increase revenues.

Ms. Jacinto-Henares had earlier estimated that the untaxed sector comprised 40% of the taxable population of the country.

The BIR, which accounts for some 70% of state revenues, is tasked to collect P940 billion this year. According to preliminary data, it had already collected P458 billion in the first half of the year, a 13.5% increase from the P403.5 billion netted in the same period in 2010. However, it missed the mid-year target of P460.3 billion.

Revenue Regulations (RRs)
are issuances signed by the Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, that specify, prescribe or define rules and regulations for the effective enforcement of the provisions of the National Internal Revenue Code (NIRC) and related statutes

Revenue Memorandum Orders (RMOs) are issuances that provide directives or instructions; prescribe guidelines; and outline processes, operations, activities, workflows, methods and procedures necessary in the implementation of stated policies, goals, objectives, plans and programs of the Bureau in all areas of operations, except auditing.

Revenue Memorandum Rulings (RMRs) are rulings, opinions and interpretations of the Commissioner of Internal Revenue with respect to the provisions of the Tax Code and other tax laws, as applied to a specific set of facts, with or without established precedents, and which the Commissioner may issue from time to time for the purpose of providing taxpayers guidance on the tax consequences in specific situations. BIR Rulings, therefore, cannot contravene duly issued RMRs; otherwise, the Rulings are null and void ab initio

Revenue Memorandum Circular (RMCs) are issuances that publish pertinent and applicable portions, as well as amplifications, of laws, rules, regulations and precedents issued by the BIR and other agencies/offices.

Revenue Bulletins (RB) refer to periodic issuances, notices and official announcements of the Commissioner of Internal Revenue that consolidate the Bureau of Internal Revenue's position on certain specific issues of law or administration in relation to the provisions of the Tax Code, relevant tax laws and other issuances for the guidance of the public.

BIR Rulings are official position of the Bureau to queries raised by taxpayers and other stakeholders relative to clarification and interpretation of tax laws.
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